Kathy Jackson told the union inquiry she could not remember what a number of withdrawals were spent on because her only records were kept in an exercise book which had gone missing. Photo: Rob Homer

It comes as a close ally of Ms Jackson, Marco Bolano, has been subject to a police report after being accused of threatening, harassing and spitting at an opponent from the HSU outside the royal commission into unions.

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In a statement he issued to the media on Thursday, Mr Belano said the allegation that he or his wife spat on anybody is false, ‘‘indeed, an outrageous fabrication’’.

‘‘Allegations that I have intimidated or assaulted anyone are false and I reject them,’’ he said.

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‘‘I am confident that there will be CCTV footage that will available to disprove any allegation that I, or my wife, spat at anyone.’’

Other attendees at the hearing have also complained of being harassed by Mr Bolano, a former HSU senior official.

In the inquiry, Ms Jackson was quizzed about the slush fund.

She said she had direct access to a Commonwealth Bank account established for a union slush fund called the National Health Development Association.

The NHDA account was opened in December 2003 with her endorsement and the approval of the branch committee of management.

She claimed the slush fund was established as an unincorporated association on the advice of Labor Party representatives and used to fund union elections and ALP electoral candidates.

It was also used for conference and travel expenses.

Ms Jackson, who has already admitted to being authorised to spend $4000 a year in unions funds for her personal benefit in lieu of overtime, said she was a signatory to the NHDA account.

“That was to compensate me for that sort of out of hours work and the sitting fees and meetings that I did very regularly out of hours,” she said.

Ms Jackson said she had direct access to the slush fund account and that she did not need to seek approval from her union branch committee before making withdrawals for amounts such as $4000 or $5000.

Asked why large sums of money ranging from $3500 to $50,000 had been withdrawn from the NHDA account, Ms Jackson said she had no recollection of what a number of withdrawals were spent on because her only records were kept in an exercise book which had gone missing.

Jeremy Stoljar, counsel assisting the royal commission asked about a withdrawal of $6000 on March 6, 2008. “Do you know what that was for?”

“No, not from memory,” Ms Jackson responded.

Asked what kind of things she would have withdrawn that sum of money for, she said: “It would have been, just from memory. . . I don't know, different campaigns that people may have asked us money for at the time; but just from looking at that date, I just can't remember”.

She could not remember the purpose of several other withdrawals for $8000, $5000 and $3500.

When Mr Stoljar put to her that smaller amounts that were coming out of the NHDA from time to time were generally used for personal purposes and the larger withdrawals may have been for some other purpose, she said, “Yes”.

When asked if there were any records identifying how the cash was spent, she said: “Other than what existed in my exercise book, no there isn't.”

“If I had my exercise book, every transaction would have been recorded faithfully, and my position is this is exactly why they have taken this exercise book, because I imagine it would embarrass a lot of people about what's in there and where the money went to,” she said.

Asked whether administration of the NHDA account fell short of proper practice, Ms Jackson said it did, in terms of what the public would expect.

She confirmed the account was not audited.

“I would say it falls short of proper practice in relation to what the public expect, but I don't say that it's an illegal account. I say that it's an account that was set up to meet the needs of the organisation at the time and that's how it was transacted,” she said.

“Some people may find that unpalatable, but that's how business was conducted, not just in my union, I imagine, but in other unions as well. Unless we have a different regulation and procedures, then this is how people operated in this environment.”

Ms Jackson said other unions including the Australian Workers Union, the National Union of Workers and the Shop Distributive and Allied Employees' Association also had similar funds.

“They were off-line sort of accounts,” she said.

Asked about some specific withdrawals of $4000 each, she said they were not for personal use, but for either political or industrial purposes.

Ms Jackson could not recall how a withdrawal of $50,000 made on March 24, 2009, was spent.

“That was in relation, I think, just from memory, with the number one branch but I can't be certain about that,” she said.

Ms Jackson recalled giving cash to Mr Bolano in an envelope for his election campaign.

Ms Jackson said she had attended a lunch with representatives of Philip Morris in 2009 and was not certain how much money it had contributed.

But Philip Morris has strongly denied having donated money to Mr Bolano's campaign and said no one with the name mentioned by Ms Jackson had worked for the company.

It said a man with a similar name had worked for rival British American Tobacco. A BAT spokesman said it had no record of giving money to the HSU.

Stephen Donnelly, who set up and operated an account for Mr Bolano's election campaign said no accounts or records were kept for the campaign.

He estimated the Australian Workers Union contributed about $10,000 to the campaign in 2009.

Mr Donnelly said he was not aware of now Opposition leader Bill Shorten or Philip Morris making any donations to the campaign.

Ms Jackson confirmed that $6000 was paid to former HSU official Shaun Hudson in cash but that money was refunded or had come from the NHDA.

Ms Jackson rose to national prominence as a whistleblower on widespread corruption at the HSU involving former senior officials Michael Williamson, now in jail, and Craig Thomson, a disgraced former head of the union and former ALP federal MP. Thomson is on bail pending an appeal against his conviction and sentence on multiple fraud charges.

Iaan Dick, the auditor for the Victoria 3 branch of the Health Services Union in 2002 to 2008, agreed with Mr Stoljar that the numbers in some of the financial records he audited “don't quite add up”.